Why Aren’t Business Credit Reports Private?

Why Aren’t Business Credit Reports Private?

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Having a good credit score is a priority for a good portion of society, and with good cause. From getting loans or mortgages to passing a background check for a new employer, there are plenty of reasons to have a good credit score. Because of this, there are an abundance of services meant to help you repair, build, or protect your credit score and personal information. There are laws and regulations in place to protect your credit, and anyone who checks your personal credit report needs your consent to do so.

Just across the border from personal credit is a similar but different area called business credit. Just like with personal credit, there are great motivators to having a solid business credit score. It can open you up to better financing options, lower interest rates, and more money with which to grow your business. As well, potential vendors or partners can check your business credit report before agreeing to go into business with you, similar to a personal background check.

The information on a business credit report is very different from what is shown on a personal credit report, both in the specific information and the sensitivity of the information. In the end, however, an individual does not need your consent to view your business credit report. Why don’t businesses have the same credit report protection as consumers?

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Legislation

The reasoning for keeping only personal credit reports private could be summed up in one word: legislation. For the last few decades, consumers have enjoyed the safety that the law can bring when it comes to their credit reports, while business credit reports have been left out in the open. “Congress enacted protections for consumer credit reports in the 1970s over concerns about privacy. Business owners– and business credit reports– were not included in that legislation,” said Gerri Detweiler, Director of Education at Nav. “Generally, businesses have been excluded from a variety of consumer protection measures, largely based on the view that they are more sophisticated and have access to professional advisors like attorneys and accountants.”

In reality, most small businesses do not have access to such sophisticated resources, and would certainly appreciate such help if it were offered to them. Another example relates to truth in lending laws, which consumers have enjoyed for years, while small businesses were left without such protection. This has been the case for years due to the same logic: that small businesses have access to more sophisticated resources and therefore do not need visibility on the cost of credit extended to their entity. Recently, California governor Jerry Brown signed SB 1235, which expands truth in lending regulations to lenders dealing with small businesses. This is monumental, because small businesses in California will now enjoy increased protection from predatory lenders, and others states could follow suit.

The good news is that the information on your business credit report is much less sensitive than that on your personal credit report. If somebody sees your business credit report, they will not have access to your social security number. While personal credit agencies are required to give you access to your personal credit report once a year, there is no such requirement pertaining to business credit. You can check your business credit for free with Nav, and many sources would make anyone who wants to check your credit pay to take a look.

What to Do

The best thing to do is to monitor your business credit, to know what your lenders or vendors would see if they were to check your business credit report. If you find something on your business report that is false, you can take the time to dispute it to clean up your profile and look better for potential business partners.

Your business information is available. Don’t underestimate the power of a good business credit score, and take advantage of the growth opportunities that come with it.

Ready to see your credit data and start building better business credit? Check Your Personal and Business Credit For Free (No Credit Card Required).

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About the Author — Connor Wilson is a writer at Nav, a free site giving business owners access to their business and personal credit scores, and tools that match them to the best financing and services.

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